Wednesday, April 15, 2015

Registrar Caveat

I've been to many property auctions, to a point I'm beginning to learn it is hardly worthwhile to buy anything with good value here. Whenever there is a hot property in auction, you find literally hundreds of bidders. In the end, the auction price turned out to be higher than market value. For example, a leasehold 20'x70' double storey link house in Sunway PJS7 auction recently fetched RM800k. Market value is around RM700k. A condo in Kelana Parkview went up to RM650k.... Market value is around RM600k.

Then never believe what the auction agent tells you. Do your own search before you go for an auction. It's troublesome, but imagine the hassle and the pain when you bought a property with a caveat. I recently found out the hard way. After going through so many auctions, I began to have less hope of ever winning one. So I didn't bother with a search and instead listened to the agent tell me the property has no issues. The laws of caveat emptor is an age old one. It means when you buy a property from an auction, you've bought all the joys and pains that comes with it - whoever sells it to you does not need to tell you anything.

At the auction I was given a copy of an old land search showing no caveats on the property. Confidently I went for it and won. When my lawyer initially told me they found a registrar caveat in a subsequent search, I didn't think it was very serious. I was so wrong.

There are 2 types of caveats. Private caveat and Registrar caveat. The latter is less common. Private caveats on the other hand is rather common in auction properties. It's usually the reason why the property ended up being auctioned in the 1st place. Or it could be lodged by the owner of the property attempting to prevent or discourage the auction. Unless there is a good reason for the private caveat, it is easy to remove it. The way to do it is to go to court. You need to spend anything between RM10,000 to hundreds of thousands depending on how determined the person who lodged the caveat is. If he is not so determined (or don't have much money...), he might not contest the court action. So, you just get a court order and the caveat is removed, the property then gets transferred to your name. If your luck is not so good, he contests it... he might lose and appeal... you have to wait years.

Under such a scenario, you will never be able to get a bank loan to pay for the auction property. And if you don't have cash to pay, the bank forfeits your deposit after the 120 days lapse. So buying an auction property can be extremely risky. Sometimes the caveat may be lodged after you win the auction and while you are processing the transfer and loan.

So what happens when you can't remove the caveat on time? By the 120 days dateline, you must pay the balance of the auction. You have to pay cash since you can't get a loan. The bank then transfers the problem of the caveat to you. If you don't pay, the bank forfeits the deposit and then they can try to auction the property to the next sucker.

As I found out, it may cost up to a few hundred thousand to remove a caveat if unlucky, it's normally not worthwhile to even consider it unless the property is worth millions. In fact, I know of people who purposely bid for caveated properties because they can get it cheaper and use the savings to fight the caveator instead.

A Registrar Caveat is however not so simple.... Normally a Registrar Caveat is lodged by the Land Office at the instructions of a Judiciary body, a court or tribunal due to a fraud case. You have to wait for this case to be settled before the caveat gets removed. But what if the court or tribunal rules in favour of the caveator? You will effectively lose the property and everything you've paid for it.

One lawyer I spoke to seems to disagree. He says that if the court rules in favour of the caveator, it means the bank fails to deliver a property to you which you bought through their auction. The bank then have to refund you the money as well as all your costs. But you may need to go to court to get this and it will be a lengthy process and obviously you need to fork out a lot of money to the lawyers. But this is however untested... Anybody wish to try?

To be continued.... in the next part, the story behind this Registrar Caveat....

Total Pageviews

Trendy place to be in Melaka

My Favourite Links

Search This Blog

About this site

This site is a platform for property enthusiasts to discuss about their real estate investments. It is meant to inspire, not to solicit services or advertise. You will not find any for sale, rent or any property advertisments in whatever form in here.

You are most welcome to contribute or ask questions. Please post your questions in this blog. Thank you.

About Me

I am a Telecoms Engineer and property collector. I have been collecting properties since taking out a low interest company loan to buy my first apartment. My prime focus has always been the Kuala Lumpur city center but recently I have been branching out to other districts. In my opinion, Kuala Lumpur offers among the most affordable real estate in the world.

Questions For Me

Each day I receive at least 2-3 questions about Properties. Thank you very much for reading my blog. However, I have no time to respond to every question, especially when 90% of the questions are almost the same. So, please post your questions to my blog, under the most relevant topic and I can respond there so we can all share. Also, perhaps other readers can also help answer them.

Some readers ask me to help or recommend properties to invest in. From time to time, I do make recommendations. However, you will have to bear in mind that if the property is super duper good, I would have bought it myself. Unless of course I cannot afford it or happen not to be in good cash flow at that moment. Yes, I do share some good buys but I also do need to protect the independence of this blog.

Advertising In This Blog

Of late we've been receiving a lot of requests to advertise or write about certain projects in this blog. So, please allow me to post a common response to address all such and future requests.In fact, I do not see anything wrong with profiting from my blog. However, this is an independent blog about property investments (or collection). We maintain our integrity through this independence. Therefore, I regret that any advertising or blogging or even comments with the purpose to promote any particular project directly or indirectly is strictly prohibited. In the past, I have advertised and sold some properties through this blog.Some are my own properties or they are properties that I would have bought but do not have the funds to buy so I would like to share the opportunity with my blog readers. To maintain the integrity and reputation of my blog which I have been running since 2008, I would not recommend anything that is over-priced, over-valued or in my opinion, not worth to be invested in. To be transparent to all blog readers, I do accept and receive finders-fees through such introductions like with any property or business transactions. However, I have also received requests from some friends and families to promote their properties which in my opinion are not attractive investments, some of which are priced too "opportunistically" - I do not advertise or blog about these!I will also accept for a reasonable fee to advertise non-property advertisments though they may be related to property investments such as furnitures, financing, insurance etc as long as they are legitimate businesses. But if the fee is not reasonable, it is not worthwhile to do it.So, I hope now everyone is clear about this. For further enquiries, please contact me at sinleongng@yahoo.com. Thank you.

Disclaimer and Copyrights

My stuffs are original and written from the heart. If any of my articles resemble other published material, it is purely coincidental. If you alert me, I shall consider editing or removing it.

You may not publish, copy or steal any articles or pictures, in part or full without any written permission from me. If you ask me nicely, or if you are nice, I will not withold any permission. Especially, if you pay me!

I am not responsible for what other bloggers write in the comments section. I will not edit any of those comments. However, if any of the comments are racist, sexual or discriminates against any minorities, I shall remove them as soon as I detect them. If any article or blogs that I write offends anyone, especially other races or minorities, I offer my apologies.... it's not intentional.